Okay, so you need pick and pack services and want to compare fulfillment costs across a few providers. Simple, right? You make a few calls, answer whatever questions they have, and wait for the quotes.
Actually, it’s not that easy because there is no standard way that fulfillment companies calculate pricing.
“Very few of the fulfillment quote requests we get are based on formal RFQs where all bidders receive the same data and quote using the same assumptions,” says Marty Koehler of Amware Logistics.
“Most companies that call have lean staffs and don’t have logistics people who understand the cost details involved in warehousing and fulfillment,” he says. “So there tends to be a lot of back and forth in order to explain terminology and how we arrived at specific numbers.”
Can You Get an Apples-to-Apples Cost Comparison?
You may think that providing the exact same data to each provider should yield an apples-to-apples fulfillment cost comparison, but most times it won’t. Different fulfillment companies will calculate the base rate in different ways.
A good example is how accessorial charges are handled. Accessorials are activities outside the standard scope. Let’s say you require box filler materials for each order and stretch wrapping for certain orders. One provider may build these costs into its base rate, while another may not. So you’re left to figure out the difference and do the math.
Many shippers assume that each provider’s per-order charge gives them a fair cost comparison, but it doesn’t.
Comparing Fulfillment Costs: What’s a Shipper to Do?
Some fulfillment companies prey on unsophisticated shippers who simply want a fast answer with the least amount of effort.
There are many factors that influence fulfillment costs – product volume, dimensions, turn rates, order volume, order size, storage method, etc. Unless the provider digs into these details, it’s unlikely that the first quote they provide will stick. Most often, the details they miss will end up inflating the price later on – after the work begins.
So don’t get frustrated by the fulfillment company that asks you to complete lengthy input forms and then follows up to dig into the data. In fact, be wary of the provider that lacks this exacting pricing approach.
It may seem like they are easier to work with, but they may be more interested in winning your business than providing a rate that they can guarantee. In three months, they may ask for an increase after illustrating to you how actual pick and pack operations are different (surprise!) from their initial, high-level assumptions.
Accurate Cost Comparisons Require Detail
Comparing fulfillment costs across providers is a little like choosing a tax accountant. Those “taxes done in one hour” ads seem attractive, but what you really want is a tax accountant who is plodding and meticulous in her efforts to uncover every possible deduction available.
Look for a fulfillment company that takes a similar approach and makes no apologies for its detailed pricing process.
The more detail the provider has on your account characteristics, the more likely you are to get an accurate rate that allows you to confidently compare fulfillment costs across providers.